Thinking of Takenaka and the others

The author is a visiting scholar of Waseda University and associate professor (on sabbatical leave) at De La Salle University. Email: batallae@dlsu.edu.ph

Certain opinions are misplaced regarding certain types of people and
their capacity for decision making and implementation. At least from
the point of view of some “accomplished” individuals in business and
government, there is a tendency to underestimate, on a wholesale-basis,
people from the academe.

Academics are downgraded for their lack of direct or practical
experience in public policy and management. From the point of view of a
non-partisan observer, the question boils down to whether experienced
or inexperienced individuals possess the right knowledge and the
capability (including the politics) to apply them in the process of
governing the economy or sectors of society.

Four years ago, at De La Salle-Manila, I was given the opportunity to
teach a graduate course on Japanese economy. While preparing for the
course, I stumbled upon a book on contemporary Japanese economy and
economic policy. The book was clear and concise. Well written in
English, it could be appreciated even by people who took some economics
courses or by economists whose training is “on the fringe.”

The next time I encountered the name of Heizo Takenaka, he had become a
member of the Koizumi cabinet, as Minister of State for Economic and
Fiscal Policy. An academic most of his life (in his younger years, he
had one-year stints at a bank and in a Ministry of Finance research
unit), Takenaka found himself at the center of an economy struggling
against serious post-bubble economy problems. Prices were going down
(deflation), there was a ballooning budget deficit, the amounts of
nonperforming assets continued to increase as bankruptcies mounted, the
financial industry was very fragile, and unemployment reached its
record high throwing more than half a million people jobless.

These and many more confronted the guy from the academe. I have seen
him on television and in the newspapers, saw him get criticized and
denounced by politicians and others for his structural reforms.
Takenaka firmly believed that structural reforms, whose implementation
had been delayed since the mid-1980s, were necessary for the revival of
the Japanese economy. The reforms were designed to increase
competitiveness in the domestic economy as well as improve government
regulation and efficiency. Takenaka courageously took the challenge. He
later assumed the task of cleaning up the bad-debt problem and of
supervising the financial sector.

On February 18, for the first time in thirteen and a half years, the
news reported a real GDP growth of 1.7% for the October-December
quarter of 2003. This translated to an annualized growth of 7 percent.
A strong export performance had stimulated investments in equipment and
other capital goods. As well, the banking sector showed signs of
recovery. Other economists were equally optimistic of the steady
recovery of the Japanese economy. Although the story is far from over
as structural reforms have not yet been fully implemented, it shows
that the value of an academic in the formation and implementation of
public policy cannot be underestimated.
Thus is fulfilled an old Chinese saying: “Excel in public office and learn. Excel in learning and assume public office.”

A review of Japanese postwar economic history would reveal names of
academics revered for their special contributions to economic recovery
and then rapid growth. They served prime ministers coming from the
Liberal Democratic Party who had little knowledge of economics. In the
United States, academics have been valued for their advice. During the
Kennedy administration, the president took in as advisers economics
professors such as Walter Heller, James Tobin (who later won a Nobel
Prize in economics), and Kermit Gordon (who became head of the
Brookings Institution). In the United Kingdom, Tony Blair sought the
advice of political sociologist Anthony Giddens, who is noted for his
works on the Third Way.

These lead to the second point: a president with little knowledge of
economics or the social sciences can be aided by a more knowledgeable
team of advisers, including those who come from the academe. A
condition toward success, as pointed out by other observers, is the
degree of cooperation among advisers, and their working relationship
with the president.

The third point is that the right policy advice coming from either
experienced or knowledgeable professionals can be ineffective if the
ultimate executive decision reflects the influence of vested or
personal interests. In the Philippines, there is a long list of highly
respected academics and experienced professionals whose creditable work
were frustrated by political decisions that favored vested interests.
Whether the technocrats (the professional administrators) or the
rent-seekers (those who gain wealth by obtaining favorable policies and
actions from government) brought down the economy may still be debated.
To be sure, however, policy decisions need to attend to the greater
good and those decisions cannot come from the rent-seekers.

In relation, the fourth point is that no matter how good the policy
advisers are, or how sincere the national leader is, the ultimate
policy decision depends on the leader’s capacity to decide. This
involves processing complex, conflicting, and even incomplete sets of
information and advice. It also involves deciding over clashing
passions and interests. The alternative to direct decision making is,
of course, delegation. Even then, the president is not excused from
making decisions. Situations arise, and often do, calling for
leadership decision. These require not only experience but knowledge on
the part of the national leader, who in the end is accountable to the
people.

The fifth point is that the right policy advice does not always come
exclusively from the policy advisers themselves. They could come from
people from all walks of life. The problems of mass poverty, crime,
corruption, and environmental degradation are the cumulative result of
unattended problems.
Although these outcomes may be unintended, the lack of attention given
to them reflects the arrogance of wealth and power in refusing other
people from participating in the governing process. Poor people are
left to care for themselves.

The sixth and final point goes beyond knowledge and experience. Taking
the right policy or course of action often requires courage. People of
policy should have the courage to stand up for what is right and
against what is wrong. This is something that appears wanting in
Philippine government.

There is something wrong in the idea that public service or policy
advice is the exclusive domain of certain types of people. It is true
that much is expected of leaders in terms of qualifications and
ability. To lead the country calls for experience, knowledge, and
courage. However, to look down on the abilities of other people to help
government is a disturbing thought.

At the end of the day, one is judged by history for his or her
contributions and not by endowments per se. People may have knowledge
or experience but it is their contribution to society that is the
ultimate measure of their worth. To courageously participate in the
task of building good government and society would perhaps be the best
commentary on one’s ability in public service.

In ending, there is a story of a new official who asked Confucius about
governing. Confucius answered, “Start with the officials and official
duties, pardon minor faults, elevate the virtuous and talented.” And
the official asked again, “How am I to know the talented and the
virtuous to elevate them?” To which Confucius said, “Elevate those you
know. As to those you don’t know, would others deny them?”